With his pink shirt, gold ring, and posh accent, John Weguelin seems as if he’s been sent over by central casting to play the role of a London investment banker. And the room where he sits—with its carpeted hush, pale polished woods, and floor-to-ceiling windows overlooking a bustling street in London’s financial district—is blandly elegant, exactly what you might expect from a banker’s office. But neither Weguelin nor the European Islamic Investment Bank are exactly what you might expect. As managing director of E.I.I.B., the West’s first investment bank to comply with sharia, Weguelin is a central player in Islamic finance’s transformation from exotic niche market to mainstream investment.

A 30-year banking veteran whose résumé includes two decades at Bank of America, Weguelin was recruited two years ago by E.I.I.B. chairman Adnan Ahmed Yousif in 2005. Though Weguelin had no experience in Islamic banking—or even extensive experience in the the Middle East—he found the project too exciting to turn down. “The opportunity to establish a bank?” he grins. “How often in your working life does that come along?”

Not often, particularly when the job involves heading up Europe’s first independent Islamic investment bank. Though established in 2005, the E.I.I.B. received authorization from Britain’s banking regulators last March and floated on the London Stock Exchange with a £75 million initial public offering a couple of months after that.

Deft steering was required during last spring’s I.P.O., since it came at a moment when Middle Eastern equity markets were correcting by about 50 percent. “It took a bit of the gloss off everything that had been achieved,” concedes Weguelin who watch as E.I.I.B.’s stock went from 25 pence to half that within the week. The stock’s continued to sink, but Weguelin insists that the core busines is “sound.” Over a year on, the bank already has a market cap of $380 million, and a client base of sophisticated asset managers, hedge funds, and private banks buying for investors. In September, E.I.I.B. will launch a private equity fund with assets under management of about $125 million.

So far, so traditional. But for a clear sign of what makes E.I.I.B. different, just turn to the bank’s first annual report, in which briefings from the chairman and company secretary open with “In the Name of Allah, the Most Gracious, the Most Merciful” and calculations of shareholders’ zakah, an annual charitable donation required of all Muslims, are supplied. The cornerstone of the bank’s Islamic nature lies in its transactions and ventures, which are guarded by its Sharia Board—four Islamic scholars who vet funds and deals to make sure they don’t contravene Koranic bans on earning interest and making profit from alcohol, pork, or unethical activities. Before the bank undertakes a new investment, emails between the sharia scholars and the London office fly, allowing for what Weguelin says are ultimately “very relaxed” meetings that occur once every six weeks. “We’ve got one of the strongest sharia supervisory boards in the business,” says Weguelin.

That’s a feat. Fast growth in the Islamic banking industry—about 20 percent annually over the past few years, to an estimated $500 billion—means that competition for top sharia scholars with financial knowledge is stiff. “There are about 150 scholars who are globally accepted in the finance world,” says Rushdi Siddiqui, director of the Dow Jones Islamic Market Index. “About 20 of them are the rock-and-roll stars.” Suddenly, Islamic scholars are becoming consultants for world-class players like Deutsche Bank, which last year started a sharia-compliant mutual fund, and Credit Suisse, which this spring launched Islamic banking services. E.I.I.B. has snagged a clutch of leading sharia experts, including Sheikh Nizam Muhammad Seleh Yacouby Yacouby, who also advises Citigroup, A.I.G., H.S.B.C., and others.

In this brave new world, more-bullish analysts speculate that Islamic banking could someday even overtake conventional banking. Both the German state of Saxony-Anhelt and a Texas oil company have already issued sukuks, or Islamic bonds. “Islamic banking is in its infant stage, but it’s been born, it’s alive and kicking, and maybe even crawling,” says Sheikh Yacouby.

Ask Weguelin about the biggest change he met in moving from Bank of America to E.I.I.B. and he won’t mention the finer points of sharia or the popularity of juice rather than wine at business lunches. What impresses him is the agility a startup has. “If you’re a small organization, you have to solve the problems yourself, and that’s very exciting,” he says. “At Bank of America, if you had a computer problem, you’d call the IT department and you’d have 20 people around your desk. Here, you do it yourself.” In hiring his 42-person-strong team, he’s taken care to pick “entrepreneurial-minded people,” pioneers who won’t be fazed by working in a new industry and a young bank. The growing sophistication of the Islamic banking infrastructure is welcome, but it hasn’t necessarily made his life simpler—at least, he says, “My wife and family certainly don’t think so.” He’s still on the road a good deal of the month, traveling to the Middle East, Switzerland, and even the United States, where the interest in Islamic finance is growing.

For Weguelin, one of the perks of his job is watching the industry toddle to its feet and into the mainstream. Until recently, making Islamic investments has largely been a Muslim practice. But if Weguelin and the E.I.I.B. have their way, sharia-compliant investing will break out of the bespoke-banking category and become another option for rich and savvy investors regardless of their religion. Though conventional banks like H.S.B.C. have set up sharia-compliant banking services, E.I.I.B., as the only entirely Islamic investment bank based in the West, is at the industry’s cutting edge. It’s a good place to be, insists Weguelin: “Islamic banking is the fastest-growing sector in the high-net-worth industry in the world at this time.” Already, around 80 percent of investors in sukuks are non-Muslim, says Weguelin, citing last year’s Dubai Ports flotation as an example of a sukuk that attracted money from non-Islamic sources. “When you figure that the Muslim population will be in the region of 30 percent of the global population in the next 10 years and then you say that there’s no reason conventional investors won’t buy the products, then you can see the potential,” Weguelin says.

The British government certainly does, having set out to make London the global Islamic financial capital, cutting tax rates and red tape in last year’s budget to do so. A report this spring from Standard & Poor’s cited the British capital’s “large and international reach” and “deep and effective markets” as key in its bid to be the world’s Islamic financial center. For Weguelin, London’s growth as an Islamic banking capital makes it easier to draw together Persian Gulf investors and City expertise, a weave that will only serve Islamic investments and mainstream investors: “Islamic banking sits very comfortably next to conventional investments.”

Weguelin is tight-lipped about E.I.I.B.’s private equity fund, but he is proud of the bank’s Pan European Islamic Real Estate Fund. It launched this spring and is the market’s only sharia-compliant property product. Muslim investors have traditionally favored private equity and real estate investments, not only because they offer competitive returns relative to mainstream investments, but also because their Islamic credentials are easier to verify. When buying a building, it’s simply a matter of making sure that your tenants aren’t, for example, brewing whiskey, producing pork, or creating pornography. “Real estate is an asset class with which most Middle Eastern investors feel comfortable,” observes Weguelin. “But many are overexposed in Middle Eastern real estate, so this helps to diversify the risk.”

Europe, of course, isn’t Weguelin’s final destination. He’s now eyeing a variety of investments in the U.S. He admits, though, that it will be a challenge, especially since Muslim investment in the States dropped significantly after 9/11. But Islamic investors are starting to regain interest in America, says Weguelin. “If you’re going to run a diversified portfolio, you’re going to look at the U.S.” And with plenty of wealthy, return-hungry investors of all faiths and a growing Muslim population, Weguelin may find a ready and willing market.